A Critique of Adaptive and Rational Expectations

In contemporary economic theory, and especially in macroeconomics, expectations are being given a central place. There is virtually no economic model that does not examine how, within a dynamic perspective, the explicit account of individuals’ expectations qualifies the conclusions of the static analysis. To a certain extent this prominent place is well founded, for expectations of future events do motivate present actions and thereby influence social phenomena as they occur in reality. However, contemporary macroeconomists go a step further. They also maintain that a specific model of the formation of expectations is necessary in order to assess the role played by expectations, and ultimately to build economic theory itself.